Dubai Islamic Bank eyes Indonesia for expansion

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Dubai Islamic BankDubai’s largest Shariah-compliant lender, Dubai Islamic Bank (DIB), which currently makes some 95 per cent of its revenue within the United Arab Emirates, says it is entering a growth phase domestically and internationally.

“We are exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC (Gulf Cooperation Council),” Adnan Chilwan said in an interview with Reuters on March 12.

“We could acquire, set up a joint venture, establish a finance company or start a greenfield operation as long as we keep management control and operate under our brand.”

Like many other banks in the UAE, the Shariah-compliant lender saw its profits nosedive after Dubai’s financial crisis erupted in 2009 and it was forced to set aside hundreds of millions of dollars to cover bad loans. The bank focused over the last few years on strengthening its balance sheet and reducing costs, and says it has now dealt with most of its bad loans.

Last year DIB completed the takeover of Dubai-based mortgage lender Tamweel, in which it already held a majority stake, through a share swap.

DIB posted a 66 per cent jump in fourth-quarter net profit to $141 million, beating analysts’ forecasts, on the back of lower financing costs and impairment charges.

Chilwan, who was promoted to CEO in July last year, described Africa as virgin territory for Islamic finance. In Kenya, most estimates put the number of Muslims at only about 15 per cent of the population of 40 million, but the financial regulator is preparing a ten-year capital markets development strategy that includes Islamic finance.

“Both consumer and wholesale opportunities are there, especially in the countries we are targeting and while the initial investments are not too intensive, the returns are extremely decent and more than acceptable in our line of work,” Chilwan said, without giving details of his plans for Africa.

He added, however, that entry into one country would ease expansion into other countries around the region.

“Given a five-year scenario, we expect a decent franchise spread across these countries with stable and solid yields across all sectors.”

However, Chilwan said the bank also expected strong growth in its domestic market, so the balance between local and international business would not change radically.

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Reading Time: 2 minutes

Dubai’s largest Shariah-compliant lender, Dubai Islamic Bank (DIB), which currently makes some 95 per cent of its revenue within the United Arab Emirates, says it is entering a growth phase domestically and internationally.

Reading Time: 2 minutes

Dubai Islamic BankDubai’s largest Shariah-compliant lender, Dubai Islamic Bank (DIB), which currently makes some 95 per cent of its revenue within the United Arab Emirates, says it is entering a growth phase domestically and internationally.

“We are exploring opportunities in Indonesia, Kenya and surrounding countries in Africa, the Indian subcontinent and the GCC (Gulf Cooperation Council),” Adnan Chilwan said in an interview with Reuters on March 12.

“We could acquire, set up a joint venture, establish a finance company or start a greenfield operation as long as we keep management control and operate under our brand.”

Like many other banks in the UAE, the Shariah-compliant lender saw its profits nosedive after Dubai’s financial crisis erupted in 2009 and it was forced to set aside hundreds of millions of dollars to cover bad loans. The bank focused over the last few years on strengthening its balance sheet and reducing costs, and says it has now dealt with most of its bad loans.

Last year DIB completed the takeover of Dubai-based mortgage lender Tamweel, in which it already held a majority stake, through a share swap.

DIB posted a 66 per cent jump in fourth-quarter net profit to $141 million, beating analysts’ forecasts, on the back of lower financing costs and impairment charges.

Chilwan, who was promoted to CEO in July last year, described Africa as virgin territory for Islamic finance. In Kenya, most estimates put the number of Muslims at only about 15 per cent of the population of 40 million, but the financial regulator is preparing a ten-year capital markets development strategy that includes Islamic finance.

“Both consumer and wholesale opportunities are there, especially in the countries we are targeting and while the initial investments are not too intensive, the returns are extremely decent and more than acceptable in our line of work,” Chilwan said, without giving details of his plans for Africa.

He added, however, that entry into one country would ease expansion into other countries around the region.

“Given a five-year scenario, we expect a decent franchise spread across these countries with stable and solid yields across all sectors.”

However, Chilwan said the bank also expected strong growth in its domestic market, so the balance between local and international business would not change radically.

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